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Home Sales About To Surge? We May See a Winter Like Never Before
Like most industries, residential real estate has a seasonality to it. For example, toy stores sell more toys in October, November, and December than they do in any other three-month span throughout the year. More cars are sold in the U.S. during the second quarter (April, May, and June) than in any other quarter of the year.
Real estate is very similar. The number of homes sold in the spring is almost always much greater than at any other time of the year. It’s even labeled as the spring buying season. Historically, the number of buyers and listings for sale significantly increase in the spring and remains strong throughout the summer. Once fall sets in, the number of buyers and sellers typically drops off.
Last year, however, that seasonality didn’t happen. The outbreak of the virus and subsequent slowing of the economy limited sales during the spring market. These sales were pushed back later in the year, and last fall and winter saw a dramatic increase in home sales over previous years. The only thing that held the market back was the extremely limited supply of homes for sale.
What About This Winter?
Some experts thought we’d return to the industry’s normal seasonality this winter with both the number of purchasers and houses available for sale falling off. However, data now shows that neither of those situations will likely occur. Buyer demand is still extremely strong, and it appears we may soon see a somewhat uncharacteristic increase in the number of homes coming to the market.
Buyer Demand Remains Strong
The latest Showing Index from ShowingTime, which tracks the average number of monthly showings on available homes, indicates buyer activity was slightly lower than at the same time last year but much higher than any of the three previous years (see chart below):
A report from realtor.com confirms buying activity remains strong in the existing home sales market:
“New housing data shows 2021’s feverish home sales pace broke a yearly record in October, . . . with last month marking the eighth straight month of buyers snatching up homes more quickly than the fastest pace in previous years. . . .”
Buyer activity for newly constructed homes is also very strong. Ali Wolf, Chief Economist for Zonda, recently reported that Stuart Miller, the Executive Chairman of Lennar, one of the nation’s largest home builders, said this about demand:
“There is still a great deal of demand at our sales centers with people lining up and not enough supply.”
The only question heading into this winter is whether the number of listings available could come close to meeting this buyer demand. We may have just received the answer to that question.
Sellers Are About To List – Right Now
Instead of waiting for the normal spring buying market, new research indicates that homeowners thinking about selling are about to put their homes on the market this winter.
Speaking to the release of a report on this recent research, George Ratiu, Manager of Economic Research for realtor.com, said:
“The pandemic has delayed plans for many Americans, and homeowners looking to move on to the next stage of life are no exception. Recent survey data suggests the majority of prospective sellers are actively preparing to enter the market this winter.”
Here are some highlights in the report:
Of homeowners planning to enter the market in the next year:
- 65% – Have just listed (19%) or plan to list this winter
- 93% – Have already taken steps toward listing their home, including working with an agent (28%)
- 36% – Have researched the value of their home and others in their neighborhood
- 36% – Have started making repairs or decluttering
The report also discusses the reasons sellers want to move:
- 33% – Have realized they want different home features
- 37% – Say their home no longer meets their family’s needs
- 32% – Want to move closer to friends and family
- 23% – Are looking for a home office
Data shows buyer demand remains unusually strong going into this winter. Research indicates the supply of inventory is about to increase. This could be a winter real estate market like never before.
Bottom Line
If you’re thinking of buying or selling, now is the time to have a heart-to-heart conversation with a real estate professional in your market, as things are about to change in an unexpected way.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.
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Why It’s Still Safe To Sell Your Home
If you’re on the fence about whether or not you want to sell your house this year, there’s good news. Real estate professionals are highly experienced in how to sell houses safely during the pandemic. Over the last year, agents have adopted new technologies and safety measures designed to keep you safe. And experts say these practices are here to stay. As Bob Goldberg, CEO of the National Association of Realtors (NAR), puts it:
“The pandemic has confirmed to all of us in the industry that technology will continue to transform real estate.”
Below is a closer look at some of the new tools real estate professionals are using to better serve sellers.
New and Existing Technology Are Impacting the Process
In the 2021 Realtor Technology Survey, NAR asks real estate professionals their opinions on the most valuable pieces of technology for their business over the past 12 months. The graph below highlights the top five tools those agents said are true game-changers:
Tools that allow agents to serve clients at a distance and limit exposure to others, including eSignature, lockboxes, and video conferencing, became increasingly important during the last year. Those same tools are just as essential today. Restricting the number of people a seller must interact with during the process is the best way to keep all parties involved in a sale safe.
Trusted Advisors Stay Up to Date on Guidelines for In-Person Showings
As things change in our day-to-day lives, the guidance on how to stay safe changes as well. NAR regularly updates the resources available to real estate professionals to ensure the latest recommendations and best practices are readily available. This includes suggestions on how to continue to conduct safe in-person showings.
Agents also follow guidance from the Centers for Disease Control (CDC) to make sure homes are safe. The CDC’s advice includes information on how to clean high-touch surfaces like doorknobs, tables, and countertops so they’re disinfected for all.
This past year changed the way agents do things for the better. Real estate professionals use new technology, tools, cleaning procedures, and the latest guidance to meet your changing needs. The goal is to keep you safe and build your confidence throughout the sales process.
Bottom Line
It’s important to know that your safety is still a top priority when it comes to selling this year. Let’s connect today so you can have the best tools available to help you take advantage of today’s sellers’ market.
Maybe with the leverage you currently have, you can negotiate a deal that will allow you to make the move of your dreams.
What’s your home’s value?
Contact one of Our Agents today!
Home Values Projected to Keep Rising
As we enter the final months of 2020 and continue to work through the challenges this year has brought, some of us wonder what impact continued economic uncertainty could have on home prices. Looking at the big picture, the rules of supply and demand will give us the clearest idea of what is to come.
Due to the undersupply of homes on the market today, there’s upward pressure on prices. Consider simple economics: when there is high demand for an item and a low supply of it, consumers are willing to pay more for that item. That’s what’s happening in today’s real estate market. The housing supply shortage is also resulting in bidding wars, which will also drive price points higher in the home sale process.
There’s no evidence that buyer demand will wane. As a result, experts project price appreciation will continue over the next twelve months. Here’s a graph of the major forecasts released in the last 60 days:
I hear many foreclosures might be coming to the market soon. Won’t that drive prices down?
Some are concerned that homeowners who entered a mortgage forbearance plan might face foreclosure once their plan ends. However, when you analyze the data on those in forbearance, it’s clear the actual level of risk is quite low.
Ivy Zelman, CEO of Zelman & Associates and a highly-regarded expert in housing and housing-related industries, was very firm in a podcast last week:
“The likelihood of us having a foreclosure crisis again is about zero percent.”
With demand high, supply low, and little risk of a foreclosure crisis, home prices will continue to appreciate.
Bottom Line
Originally, many thought home prices would depreciate in 2020 due to the economic slowdown from the coronavirus. Instead, prices appreciated substantially. Over the next year, we will likely see home values rise even higher given the continued lack of inventory of homes for sale.
How Low Inventory May Impact the Housing Market This Fall
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[et_pb_column type=”4_4″][et_pb_text admin_label=”Text”]Real estate continues to be called the ‘bright spot’ in the current economy, but there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale.
Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low interest rates, but there just aren’t enough houses for sale to meet that growing need. Sam Khater, Chief Economist at Freddie Mac, explains:
“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”
According to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs inventory for 6 months. Today, we’re nowhere near where that number needs to be. If the trend continues, it will get even harder to find homes to purchase this fall, and that may slow down potential buyers. Danielle Hale, Chief Economist at realtor.com, notes:
“The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales.”
The realtor.com Weekly Recovery Report keeps an eye on the number of listings coming into the market (houses available for sale) and the total number of listings staying in the market compared to the previous year (See graph below):
Buyers are clearly scooping up homes faster than they’re being put up for sale. The number of total listings (the orange line) continues to decline even as new listings (the blue line) are coming to the market. Why? Javier Vivas, Director of Economic Research at realtor.com, notes:
“The post-pandemic period has brought a record number of homebuyers back into the market, but it’s also failed to bring a consistent number of sellers back. Homes are selling faster, and sales are still on an upward trend, but rapidly disappearing inventory also means more home shoppers are being priced out. If we don’t see material improvement to supply in the next few weeks, we could see the number of transactions begin to dwindle again even as the lineup of buyers continues to grow.”
Does this mean it’s a good time to sell?
Yes. If you’re thinking about selling your house, this fall is a great time to make it happen. There are plenty of buyers looking for homes to purchase because they want to take advantage of low interest rates. Realtors are also reporting an average of 3 offers per house and an increase in bidding wars, meaning the demand is there and the opportunity to sell for the most favorable terms is in your favor as a seller.
Bottom Line
If you’re considering selling your house, this is the perfect time to connect so we can talk about how you can benefit from the market trends in our local area.[/et_pb_text][/et_pb_column]
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Two Reasons We Won’t See a Rush of Foreclosures This Fall
The health crisis we face as a country has led businesses all over the nation to reduce or discontinue their services altogether. This pause in the economy has greatly impacted the workforce and as a result, many people have been laid off or furloughed. Naturally, that would lead many to believe we might see a rush of foreclosures this fall like we saw in 2008. The market today, however, is very different from 2008.
The concern of more foreclosures based on those that are out of work is one that we need to understand fully. There are two reasons we won’t see a rush of foreclosures this fall: forbearance extension options and strong homeowner equity.
1. Forbearance Extension
Forbearance, according to the Consumer Financial Protection Bureau (CFPB), is “when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage.” This is an option for those who need immediate relief. In today’s economy, the CFPB has given homeowners a way to extend their forbearance, which will greatly assist those families who need it at this critical time.
Under the CARES Act, the CFPB notes:
“If you experience financial hardship due to the coronavirus pandemic, you have a right to request and obtain a forbearance for up to 180 days. You also have the right to request and obtain an extension for up to another 180 days (for a total of up to 360 days).”
2. Strong Homeowner Equity
Equity is also working in favor of today’s homeowners. This savings is another reason why we won’t see substantial foreclosures in the near future. Today’s homeowners who are in forbearance actually have more equity in their homes than what the market experienced in 2008.
The Mortgage Monitor report from Black Knight indicates that of all active forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes (See graph below):
Black Knight notes:
“The high level of equity provides options for homeowners, policymakers, mortgage investors and servicers in helping to avoid downstream foreclosure activity and default-related losses.”
Bottom Line
Many think we may see a rush of foreclosures this fall, but the facts just don’t add up in this case. Today’s real estate market is very different from 2008 when we saw many homeowners walk away when they owed more than their homes were worth. This time, equity is stronger and plans are in place to help those affected weather the storm.
Home Sales Hit a Record-Setting Rebound
With a worldwide health crisis that drove a pause in the economy this year, the housing market was greatly impacted. Many have been eagerly awaiting some bright signs of a recovery. Based on the latest Existing Home Sales Report from the National Association of Realtors (NAR), June hit a much-anticipated record-setting rebound to ignite that spark.
According to NAR, home sales jumped 20.7% from May to a seasonally-adjusted annual rate of 4.72 million in June:
“Existing-home sales rebounded at a record pace in June, showing strong signs of a market turnaround after three straight months of sales declines caused by the ongoing pandemic…Each of the four major regions achieved month-over-month growth.”
This significant rebound is a major boost for the housing market and the U.S. economy. According to Lawrence Yun, Chief Economist for NAR, the momentum has the potential to continue on, too:
“The sales recovery is strong, as buyers were eager to purchase homes and properties that they had been eyeing during the shutdown…This revitalization looks to be sustainable for many months ahead as long as mortgage rates remain low and job gains continue.”
With mortgage rates hitting an all-time low, dropping below 3% for the first time last week, potential homebuyers are poised to continue taking advantage of this historic opportunity to buy. This fierce competition among buyers is contributing to home price increases as well, as more buyers are finding themselves in bidding wars in this environment. The report also notes:
“The median existing-home price for all housing types in June was $295,300, up 3.5% from June 2019 ($285,400), as prices rose in every region. June’s national price increase marks 100 straight months of year-over-year gains.”
The graph below shows home price increases by region, powered by low interest rates, pent-up demand, and a decline in inventory on the market:
Yun also indicates:
“Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply.”
Bottom Line
Buyers returning to the market is a great sign for the economy, as housing is still leading the way toward a recovery. If you’re ready to buy a home this year, let’s connect you to one of our Real Estate Agents to make sure you have the best possible guide with you each step of the way.
What You Can Do to Get Your House Ready to Sell [INFOGRAPHIC]
What can you do to get your house ready to sell:
Some Highlights:
- Believe it or not, there are lots of things you can do to get your house ready to sell without even going to the store.
- Your real estate plans don’t have to be completely on hold even while we’ve hit the pause button on other parts of daily life.
- Tackling small projects from cleaning the corners you may normally skip to tidying up your yard are easy and necessary wins if you’re thinking of listing your house and making a move.
- Contact one of our Sales Agents to help you get ready.
November 2018 HOUSING MARKET UPDATE
The Green Team’s November 2018 Housing Market Update was held live on Facebook Tuesday, November 13 at 2 p.m. If you missed the live webinar, you can view it at your convenience by clicking here.
You can also sign up for future updates at GreenTeamHQ.com/hmu.
Meet this month’s Panelists…
Geoffrey Green , President/Broker of Green Team Home Selling System, moderates the monthly webinar and presents the national stats, as well as the market updates for Orange and Sussex Counties. This month he is joined by Pam Zachowski and Keren Goren of Green Team New Jersey Realty and Vikki Garby, Green Team Home Selling System, Warwick.
Joe Moschella, Branch Manager and Vice President of Lending, and Amy Green, Vice President of Lending, of Guaranteed Rate discuss market updates from a mortgage industry perspective.
The National Outlook
According to Geoff Green, it’s a very exciting time in the housing market right now as we’re starting to see some shifts. We’re experiencing all-time highs reminiscent of 2008 over the last 18 months. It does seem like things are cooling off. According to Michael Fratantoni, Chief Economist of the Mortgage Bankers Association, he expects that home sales growth will pick up again over the next year, even with somewhat higher mortgage rates, though the pace of price growth will likely slow.
Despite the fact that national and local numbers indicate that the velocity of homes selling is actually slowing, Fratantoni and some others are predicting that it is going to increase in 2018. So, it’s not that appreciation is going down, it’s just slowing down.
The Mortgage Bankers Association, National Association of Realtors, and Freddie Mac, with the exception of Fannie Mae, all are predicting increases over the past two years. All are predicting increases over the past year. For the most part each of these organizations wants the housing market to continue to grow. Geoff reminds us that it’s in their best interest. It’s important to be aware of the source of information. During the downturn In 2006, 2007 and 2008, during the downturn, some organizations were putting out information that did not accurately portray what was happening. However, you can rely on the Green Team to put out information that is accurate and honest.
In projections for 2018 through 2022, everyone seems to have a positive outlook that the market will continue to appreciate. Just at a slower pace.
November 2018 Housing Market Update – Orange County
Units Sold
While this is hyper local, it is reflective of the 2018 national numbers. While prices may increase and decrease, depending on inventory, units sold have been a mixed bag this year versus last year. It’s been up, it’s been down.
Average Price
Geoff has found that price always lags activity, according to his observations over the past 14 years. If you start to see a slowdown in activity, 6 to 8 months later you’ll start to see a slowdown in the rate of price increases.
Sold to Asked Ratio
This is telling you at what percent of the asking price your home is selling for. The closer you are to 100%, the hotter the market. While this took a little dip recently, it is still at very high levels.
November 2018 Housing Market Update – Sussex County
Units Sold
This is a small data sample that is still reflective of what is happening nationally. Again, it’s a mixed bag, up, down, then often flat.
Average Price
Average price never really gained a tremendous amount of traction, as compared to Orange County, where there had been increases in price.
Sold to Asked Ratio
This looks similar to what is happening in Orange County.
Panel Discussion
The Sales Associates Points of View
Geoff asked Vikki what changes she’s seen since she was last on the panel about 4 months ago… Vikki agreed that she has been seeing a little bit of a slowdown, part of which she believes is due to timing. Many families time their house hunting to coincide with the start of school. However, what she’s finding is a lot of people are looking for land. Historically, we’ve had low inventory compared to the number of buyers, And, as existing house prices go up, more people are starting to consider new construction. Housing starts will be up 9% beginning of the coming year. So there is still a lack of inventory.
Pam also sees a slowdown. More people are looking for homes, but between the low inventory, the start of the school year, people are taking their time. She still sees investors trying to buy and flip homes but finding it harder and harder to find that good deal that makes it worthwhile.
Geoff then asked about appraisals. Are there issues with properties appraising, or are there now enough comps in the marketplace? Keren has not seen any problems recently. They’re all coming in at asking and a little bit above. One thing she has noticed is Sellers asking for CMA’s or listing presentations, more than she had over the summer. Keren always advises clients that we only know what the market is right now and can’t tell where it’s going. She lets them know that low inventory makes it a good time to put their home on the market, as opposed to waiting for Spring, Geoff replied that sellers that were holding off putting their home on the market may now decide to take a chance, seeing that the market is cooling off a little. This may ultimately bring more inventory and more transactions to the marketplace as a whole. There are still many buyers out there, anxious to find a home.
A Mortgage Industry Point of View
According to Joe Moschella, over the last 5 months they’ve seen a steady rise in interest rates. The year started with a 10-year treasury note at 2.21% and this week it was 3.21%, one full percent. That, along with the Fed stopping its purchasing of mortgage-backed securities, caused a liquidity crunch in the market. This contributed to pushing rates up. They started the year with 4% on a 30-year fixed rate and are now closing in on 5%.
Geoff asked Joe what the bond market was like 4 years ago on a percentage basis, just to give some perspective. Joe brings it back to 9/11, when the Fed didn’t want to see the economy spiral down. They jumped in and started dramatically dropping rates, bringing them down to almost zero. Now we’re seeing the unwinding of these artificially low rates. Thankfully the Fed eased into this, providing a “soft landing.” 2.21 to 3.2% represented about ¾ of a percent, interest rate wise. About 2, 2-1/2 years ago we were at 1.2% on the US Treasury. Before that, we were at the 0.7, 0.8% range. We’ve seen a steady rise, which hopefully the economy is strong enough to handle.
Some of the other changes in the market on the mortgage front are in the role technology is playing. Lenders are able to verify client’s income and assets automatically, do the application online and do the process without sending any paperwork back and forth. The whole process is done digitally.This is revolutionizing the industry and leading to higher consumer satisfaction. The industry is also easing credit standards. Geoff asked if easing credit standards was necessarily a good thing. Joe responded that rising rates have opened the door for new loan products to come out. Those new products are not coming from the banks, but rather from private equity firms flowing back into the market. No verification loans do not exist, but they have a bank statement loan that has come back into play. No seasoning waiting period for someone who had a foreclosure or bankruptcy or short sale, whereas before you had to wait three, four or seven years. Geoff stated that if you’re talking about private equity, they basically can do whatever they want with their money, as long as those products don’t make it into mortgage-backed securities. He asked if there were any controls in place to make sure that didn’t happen again. The trade-off with non-conforming products is that the buyer has to have some “skin in the game.” They need a sizeable down payment, and investors want higher return for higher risk, so rates may be at the 6-1/2% range.
Geoff said it’s important to keep things in perspective. The sky won’t be falling if rates hit 6-1/2%! Historically, it’s a pretty average rate.
Joe and Amy had a graph showing 10-year treasury yield minus 2-year treasury yield. Historically when those yields come together, it signals a slowdown in the market or a recession. From Joe’s perspective, we might have a slow down in the stock market and see a pull back, but he’d rather see a market that goes up and goes down. In a stale market buyers and sellers are sitting on the fence; there is no call to action. As far as housing goes, everyone can do well and make some money.
Geoff thinks there is enough pent up demand from 2008 to 2016; there are a lot of people who need to buy a home and rates are still low enough. The American housing market is the place to be in the Global real estate market. There may be a continued cooling off and slow down a little. We’ve been at such high levels right now, it had to. Like the stock market, it can’t keep going up indefinitely; at some point it has to come down.
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December 11, 2018 at 2 p.m.
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